China Mobile Ltd. (CHL), ranking as the largest mobile carrier in the world, reported 2012 results which were in line with expectations. The result has no immediate impact on the company’s Aa3 rating according to Moody’s Investors Service. The rating outlook remains positive, in line with the outlook for China. China Mobile maintained a net cash position of about RMB378B (USD$60.83B) as of December 2012, with unrestricted cash balances of about RMB408B (USD$65.66B) vs. total debt of about RMB30B (USD $4.82B). CHL will be able to cover its high CapEx requirement for coordinating 4 networks, including 2G, TD-SCDMA, TD-LTE and WLAN.
Increasing CapEx, Lower Cash Flow, Same Credit Rating for 2013
For 2013, CHL plans to increase its CapEx to RMB190B (USD$30.6B), 30% of its revenue (up from 23% in 2012), to deal with growing demand for data services and strengthening its TD-LTE network. CHL’s cash flow ratios may fall in 2013 due to high CapEx ratio, but its overall credit profile will remain according to Moody’s.
Wireless Communication Equipment market and Wireless Ecosystem
With over $30B investment into TD-LTE from CHL, numerous companies will benefit. RBC Capital analyst Doug Freedman views this as an incremental positive for those exposed to the wireless communication equipment market and wireless ecosystem. Below is a list of companies which will benefit from growing TD-LTE investment. The list further expands our previous listing of companies involved with TD-LTE in China.